16 October 2013

Shutdown Will Probably End Today

A day before the deadline to increase the debt limit of the United States and prevent a default on the national debt, Congress appears to have reached a deal to end a sixteen day old government shutdown, the longest since the twenty-one days shutdown of 1995-1996, and one of the longest of all time.

According to the Denver Post: "The proposal called for the Treasury to have authority to continue borrowing through Feb. 7, and the government would reopen through Jan. 15." The only concession in the plan relative to "clean bills" is that "It requires individuals and families seeking subsidies to purchase coverage to verify their incomes before qualifying."

The deal will easily clear the U.S. Senate but will likely pass in the U.S. House with the support of almost all Democrats and only a minority of Republicans in the House.

The deal represents a near total defeat for Republicans in their bid to win concessions from the White House postponing implementation of Obamacare and the public has blamed the shutdown primarily on Republicans whose popularity in opinion polls has plummeted to all time lows as a result of the tactic.

The move puts the ability of Republicans to retain control of the House in the 2014 elections, which had previously been very likely, in real doubt. Ironically, however, the Republicans in Congress most likely to pay the political price for this tactic are those in moderate districts who were least supportive of it, as their seats are most vulnerable to shifts in public opinion. Thus, the Congressional Republican party in 2015 (i.e. the 115th Congress) is likely to be even more conservative than it already is, despite the fact that it has already moved to the right since 2011 and has lurched dramatically to the right since the shutdown in 1995-1996 (the 104th Congress) - which also would move the GOP further from the political center.

Meanwhile, Krugman notes that GOP political tactics and policy stances in Congress have been very bad for the U.S. economy:

Macroeconomic Advisers has a new report out about the effects of bad fiscal policy since 2010 — that is, since the GOP takeover of the House. . . . They say that combined effects of uncertainty in the bond market and cuts in discretionary spending have subtracted . . . around $700 billion of wasted economic potential. . . . they also estimate that the current unemployment rate is 1.4 points higher than it would have been without those policies . . . we’d have unemployment below 6% if not for these people.